You are probably right with it being somewhere in the prison's yard and he just tuned out everybody else like we saw him do at the end of the first season on Time's Square.

I think the description was meant to make us think it was Elliot they are watching over, but it doesn't make much sense to me now that we know he is in prison. Dead-guy would have either had to get into prison every day or watch him from outside. Neither scenario would really be covert in my opinion.

I think dead-guy was one of Tyrell's guys, so I'd think he would recognize Tyrell and Joanna wouldn't just sit on her ass, if she know where Tyrell is.

Mr.Robot tells Elliot that they killed Tyrell, but I am not really sure that he is telling the truth. He is really reluctant to tell Elliot about what happened during the three days he was out and asks him something along the lines of "Why the [blank] do you care so much about what happened", which makes me think he only told him that they shot him, so he would finally stop asking questions and move on.